Aimco Closes Financing for $190M Redevelopment
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VENICE, CA-Aimco has closed financing to fund redevelopment for Lincoln Place, a 35-acre property here. The redevelopment is being funded by a $190.7-million FHA-insured loan from lender and servicer Red Mortgage Capital LLC and represents the largest FHA Section 221(d)(4) unsubsidized loan ever insured by the US Department of Housing and Urban Development.
Lincoln Place was constructed between 1949 and 1951, is listed on the National Register of Historic Places and the California Register of Historic Places and is a local historic-cultural monument. The redevelopment is designed to revive the charm of the community’s existing buildings and to preserve its expansive open green spaces including nearly 400 trees. Newly constructed buildings will maintain the character and appeal of this distinctive property.
An earlier phase of the redevelopment began last year with the renovation of four buildings containing 65 apartment homes. Work was completed earlier this year, and 50 of the apartment homes have been re-leased to returning residents. Over the next two years, Aimco will redevelop another 41 buildings including 631 now-vacant apartment homes, together with common areas and landscaping. The firm will also construct on now-vacant land 13 new buildings with 99 apartment homes, a 5,000-square-foot leasing center and a 6,100-square-foot fitness center and pool area.
According to Terry Considine, chairman and CEO of Aimco, “It is very gratifying that the Lincoln Place redevelopment is now underway. It has taken many years to arrive here. More, it has taken the hard work of many, including officials of the City of Los Angeles, the HUD Los Angeles field office and my Aimco teammates. I am delighted by our prospects.”
The redevelopment loan bears interest at 2.73% and is interest-only until 2014, when it converts to a 40-year fully amortizing loan that is freely pre-payable after 10 years. At closing, Aimco prepaid a $63-million loan secured by the property that required interest at 7.5% and that was due in fourth-quarter 2013. Additionally, because of its historic significance, the project has been approved for historic tax credits, which Aimco intents to sell, raising $16 million.
According to Aimco, demand for apartments in Venice is strong, with approximately 30% of the submarket population in the prime renter age bracket of 24 to 40 years old and with renters accounting for 57% of all households. As of second-quarter 2012, the submarket median income was $76,000, while the submarket median home value was $635,000. The submarket multifamily supply increased at the annual average of 1.74% between 1990 and 2009. Since that year, only 70 units have been added, and REIS, a third-party provider of commercial real estate performance data an analysis, projects that it will take four more years for multifamily completions as a percentage of existing stock to return to historic levels.
As GlobeSt.com reported earlier this week and last week, an Archstone-sponsored partnership has purchased the Frank, a LEED-Platinum certified 70-unit apartment community in Venice, CA, and is renaming it Archstone Venice on Rose. Gerding Edlen was the seller, and the purchase price, $56,762,000—$810,886 per unit or $605 per square foot—represented one of the highest prices per unit ever achieved for a class-A multifamily asset in Los Angeles County.
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